Canada’s next potential ‘carbon bomb’: Will a final investment decision be forthcoming for Ksi Lisims LNG?

Government investment likely necessary to help land the financing needed to get the BC facility afloat

[I recently did some digging into what’s holding up a final investment decision for Ksi Lisims LNG – potentially Canada’s next major ‘carbon bomb.’ Turns out, the American owners of the proposed project are hoping for public investment from the Canadian government. A version of the following piece was first published by Canada’s National Observer here.]

The next major new LNG project on the docket for Canada’s West Coast is Ksi Lisims LNG. The PRGT pipeline needed to bring gas to the proposed floating liquefaction plant was granted regulatory approval in June 2025. The LNG export facility itself was granted the green light by a joint BC and federal environmental review process last September. Two months later the Carney government designated it as a “Major Project” for fast-tracking.

All that awaits now is a “final investment decision” by the private sector owners of the proposed project, and construction will get underway. So what’s the hold up?

A quick refresher: Ksi Lisims LNG, if built, would reside off a small island at the mouth of the Nass River north of Prince Rupert. The facility would receive fracked gas via pipeline from BC’s northeast, supercool the gas, and produce 12 million tonnes of liquefied natural gas (LNG) each year. This liquid gas would get put into ocean tankers, where it would be shipped to Asia, and once burned there, would produce about 32 million tonnes of greenhouse gas emissions, roughly equivalent to half the total annual emissions of British Columbia – hence its apt description as a “carbon bomb.” Much of the floating facility itself will be built in modular form in South Korea, before being towed to the Nass. According to the project proponents, the project would employ 800 people during peak construction. Once built, the number of permanent jobs would be somewhere around 200.

Ksi Lisims gets billed as an Indigenous-led LNG project – a partnership between the Nisga’a Nation, Rockies LNG and Western LNG. But in fact, it is 100 per cent American-owned. The associated PRGT pipeline is currently owned 50-50 by Western LNG and the Nisga’a government. But the LNG plant itself is fully owned by Texas-based Western LNG. Western LNG is, in turn, financed by Wall Street private equity firms, mainly Blackstone (the world’s largest asset manager, headed by Steve Schwarzman, a close advisor and major donor to President Trump) and Apollo (another massive asset manager, headed by Marc Rowan, whom Trump recently appointed to his misnamed “Board of Peace”). The role of the Nisga’a Nation is that of landlord – they own the land where the Ksi Lisims facility will be located (although the island in question is actually outside the Nisga’a’s formal treaty territory), so they will collect rent on the project. But the Nisga’a do not have an equity stake in Ksi Lisims.

The proponents would welcome additional Indigenous equity partners for the associated PRGT pipeline, and probably hope to tap the federal government’s Indigenous Loan Guarantee Program for that. The Nisga’a likely do not want to be the sole Indigenous owners and may well want to spread out the risk. However, Western LNG shows no interest in having the Nisga’a assume an equity stake in the LNG plant itself (this is in marked contrast to the smaller Cedar LNG project, in which the Haisla Nation own 50 per cent of the project).

I’m just speculating here, but this may be because, as the facility resides on a floating platform, if markets shift, Western LNG may want to keep open the option of moving the facility elsewhere, abandoning the pipeline and leaving its Indigenous equity partners holding a stranded asset. According to a recent article in the Financial Times, floating terminals have become increasingly popular within the global LNG industry, in part because they are mobile; if a location becomes politically unstable or a particular gas field is exhausted, the liquefaction plant can be moved. Similarly, an industry publication notes that among the advantages of floating terminals is that it “Facilitates changing locations as and when needed.”

Key missing pieces for a final investment decision

The Ksi Lisims project is both very expensive and risky. The cost of the facility is currently estimated at over $10 billion, while the associated PRGT pipeline is slated to cost a further $10-12 billion. But of course, the track record of such things is that the final cost ends up clocking in at much more. For example, the price tag of the much smaller Woodfibre LNG facility in Squamish BC is now slated to be USD$8.8 billion, up from an original estimate of $5.1 billion, while the Coastal GasLink pipeline that feeds the LNG Canada plant in Kitimat ended up costing $14.5 billion, more than double the original budget of $6.6 billion. The extraordinary cost-escalations with the Trans Mountain Pipeline Expansion are now well known.

The proposed PRGT pipeline route is rugged, and numerous First Nations along the way oppose the project. So, expect legal challenges and, as we witnessed with the Coastal GasLink Pipeline carrying fracked gas through Wet’suwet’en territory, protests and possible blockades.

Then there’s the matter of whether there are sufficient buyers for what Ksi Lisims will be selling. In the context of the current crisis in the Middle East, Canadian-sourced LNG gets pitched as “safe and secure.” But it’s not at all clear potential investors see it that way. As Canada’s National Observer has previously reported, questions keep emerging about whether the market may be awash in too much LNG supply by the time Ksi Lisims is ready to ship its product.

Much like Europe quickly learned in the wake of Russia’s invasion of Ukraine, the lesson potential buyers may be taking from the war sparked by the US-Israeli attack on Iran and Iran’s counterstrikes is that fossil fuels are high risk, and that events can drive up prices at a moment’s notice. While some may see the current crisis bolstering the case for Canadian-based LNG, it is equally plausible the war will serve to expedite the transition to renewables in the markets to which Canadian LNG producers hope to ship, as many are already doing. As Canada’s National Observer reported last week, two Nisga’a Nation members have just filed a lawsuit against their own government, claiming the Nation failed to adequately consult its own citizens about the purchase of PRGT, and that the project could become obsolete as other countries transition off fossil fuels.

Currently, Shell has a 20-year purchase agreement to buy just under 17 per cent of what Ksi Lisims will produce, while France’s Total Energies has signed a similar purchase agreement. Combined, Ksi Lisims has secured buyers for one-third of the LNG it plans to produce. But Western LNG needs more construction financing before coming to a final investment decision, and potential financiers, in turn, would like to see a much larger share of the project have known “offtakers” (as the industry calls these secure purchasers); the financing is dependent on assured customers.

Vancouver’s former ‘greenest Mayor’ becomes a key decision-maker

As Western LNG seeks to woo potential private lenders and investors (be they banks or additional private equity firms), federal support sends a helpful signal. In a recent and very informative YouTube Livestream hosted by Dogwood – War, LNG, Epstein, Canada: Making Sense of it All – Kai Nagata and Molly Henderson explain, “They need government money and subsidies to de-risk these projects.”

As Western LNG media spokesperson Rebecca Scott told an industry publication after Prime Minister Carney designated Ksi Lisims a major project, “We’re not far off. … Having the strong support of the Canadian government helps those discussions. It takes the factor of political risk out of those discussions and gives some reassurance to the people we’re talking to that the government is a supporter, and they’re going to help us to make sure that we’re a success.”

[Incidentally, I made multiple attempts to secure my own interview with a Western LNG representative for this piece but received no response.]

Absent sufficient private financing, Western LNG may be hoping the federal government itself will come through as an investor, which would send a significant message to private financiers that they should join in. Were this to occur, it would most likely happen through a major loan from the Canada Infrastructure Bank (CIB).

I asked the CIB if Western LNG has sought investment from them. The CIB’s reply: “The CIB meets with infrastructure proponents about critical projects that meet our mandate for investment. We have spoken with these project proponents, and understand the importance of this investment for Canada, but we have nothing to announce at this time.”

Interestingly, the CIB comes under the portfolio of federal Minister of Housing and Infrastructure Gregor Robertson, the former mayor of Vancouver who led a 10-year effort to make Vancouver “the greenest city in the world.” While Robertson has stood (slightly uncomfortably) behind the prime minister at recent “major project” announcements, he is no fan of fossil fuels. He was, for example, a strong opponent of the Trans Mountain Pipeline Expansion while mayor. And yet his decision on whether to approve a Ksi Lisims investment may well be key to unlocking the private capital needed for a final investment decision. (Those hoping Robertson reflect carefully on this weighty matter may want to send him a note to that effect, and consider signing up for Dogwood’s action list here.)

The second form of federal support Western LNG likely seeks, as indicated above, would be loan guarantees for additional First Nations to take an equity stake in the PRGT pipeline. That would help to de-risk what is likely the most high-risk piece of the overall project.

So sits the state of play for Canada’s next potential carbon bomb. It would be the height of irony indeed if this “Indigenous-led” and “private sector” major project ends up proceeding, but only as American-led and government-financed.